GlobalAutoTV
Click to watch Graeme Maxton -
Click to watch Graeme Maxton -
global resources
Need an office somewhere in the world? Office suites, meeting rooms, virtual offices, network access



free downloads
GLOBAL: "Communication, Distance and Culture: Protecting your supply chain from these disruptions" S

GLOBAL: "Communication, Distance and Culture: Protecting your supply chain from these disruptions" Seminar brochure.

proceed to download
eJournals




back to index backGLOBALtalk December,  2014


China: Lessons for employers on the risks of unwritten contracts and minimizing overtime liability

The Superior Court in Jiangsu Province has issued information and guidance on typical employment cases that came before the court during 2013, which provides a useful insight into some of the issues commonly litigated in the PRC labour courts. Whilst the cases have no precedent value in other regions, the principles are largely the same elsewhere. The following case studies provide important lessons for global employers operating in China:

The risk of unwritten and unsigned contracts

Under PRC Labour Contract Law, an employee who does not have a valid (signed) written contract of employment is entitled to double salary from the second month after starting work to the earlier of the date when the contract is signed or the end of the twelfth month after starting work.  If the contract remains unsigned at twelve months, an open-ended contract will deemed to be in force. It is quite common for employees to be awarded double salary, even where this is just the result of an administrative oversight. As such there could be an incentive for an employee to avoid entering into a signed contract of employment.   This case study shows that an employee cannot benefit from their own breach of duty relating to the execution of a contract.

The claimant joined the company as HR manager on May 14, 2012. The legal representative of the company sent a template of the employment contract to the claimant asking her to manage the execution of all employment contracts with staff. In November 2012, the labour authorities checked whether the company had signed written employment contracts with all employees, and found that all contracts had been signed except for the claimant's. Thereafter, the company ask the claimant to sign her contract, but she delayed the process with various excuses. At the end of November, the claimant resigned and brought a claim for double salary. The court refused her claim because she was the HR manager and therefore liable for employment contract execution. The fact that she did not have a written employment contract was a sign of her failure to perform her duty. This serves as a reminder to employers operating in China of the importance of ensuring that written contracts are entered into and fully executed with all staff, including those who are themselves responsible for discharging this as part of their employment duties.  Employers entering into China should consider including the duty to execute contracts into job descriptions of relevant individuals.

Invalid working hour system led to overtime liability

Many employers operating in China apply for approval to implement special working systems as this can significantly reduce overtime liability. This case study shows that employers can be liable for overtime payments based on standard working hours if the position in question does not in reality comply with the requirements of the special working system.

A factory worker was successful in a claim for overtime pay based on standard working hours despite the fact that his position had been approved to be covered by the Comprehensive Working Hour system (CWH). CWH can reduce overtime liability as it enables working hours to be calculated on a periodic basis (eg monthly, quarterly annually) and the rate of weekend overtime (150%) is lower than the rate for the standard working hour system (200%). For the CWH system to apply, the employer must obtain approval from the local Human Resource and Social Security Bureau, which must be renewed annually.

In this case, the court decided that although approval had been granted, in reality, the worker's role did not meet the requirements of the CWH system or reflect the description of the job given in the approval application. Therefore, the worker was entitled to overtime pay based on standard working hours and the employer was required to pay the shortfall.

Employers should take note that the mere fact that approval for CWH has been granted for a certain position, does not prevent an employee from bringing a claim for additional overtime pay if the reality does not reflect the position described in the approval application. Special working hour systems should only be used where they are suitable for the positions in question, and should not be used to evade overtime payments. When approval is granted for a position, the company should ensure that the job as described in the application is properly implemented. The same principle will apply to the Flexible Working Hour System.

Source: DLA Piper
- GAI




previous page

go top
search our site


Loading

GLOBALtalk

Other articles from the same issue (December,  2014).

Managing global compensation: the quest for compliance
play read on

How to Lead a Successful Global Team
play read on

2015 Global Recruiting Trends: LinkedIn’s 4th annual report
play read on

The Untapped Value of Overseas Experience
play read on

The Future of Management: More Agile, More Digital, More Global
play read on

Insights on the changing global workforce
play read on

US and China Extend Visas to 10 Years
play read on

"How I Manage Across Cultures and Companies" by Carlos Ghosn, Chairman and CEO, Renault-Nissan Alliance
play read on

EU sees annual growth in labor costs
play read on

US Boards Lack Global Insights
play read on

Chasing Low-Cost Labor in Mexico: Is VW Chattanooga the Last New U.S. Auto Plant?
play read on

Management Capability Index India 2014 Report
play read on

German Labor Costs Growth Accelerates In Q2
play read on

US: The United Auto Workers on the Skids?
play read on

Guide to China Market Salaries
play read on

German Government May Say 'Nein' To After Work Emails
play read on

Bridge the Gap: Rebuilding America’s Middle Skills
play read on

Canada: 'Paid to learn': Facing skills shortage, manufacturers invest in training youth
play read on

US: Some employers face higher federal unemployment taxes on Jan. 31
play read on

Indonesia Companies Need to Capitalize on Improving Employee Engagement Trends
play read on

UK Immigration Update – Changes to immigration rules
play read on

US Renews Workplace Rights Agreements with LATAM Countries
play read on

Malaysians now required to pass English to graduate
play read on

Spain: Changes to the taxation of employee share plans
play read on

China: Lessons for employers on the risks of unwritten contracts and minimizing overtime liability
play read on

Long-term Trends Reshape China's Talent Landscape
play read on

U.S.: State Minimum Wages Going Up in 2015
play read on

Latin American Travel Management Challenged By Data Deficiencies
play read on

Chinese companies in US urged to learn the employment laws
play read on

Hong Kong employers risk jail time for “blind” job ads
play read on

Managers Wanted: War for Talent Heats Up in China
play read on

Study Finds Brazil Lost US$400 Billion to Fraud
play read on

Brazil Has Created 700,000 New Jobs in 2014. One Million Are Expected Till End of Year
play read on

Latin America – Pensions: Addressing the Ticking Time Bomb
play read on

Global Skills - Skilling India
play read on

Singaporeans feel “obliged” to work long, hard hours
play read on

US: IRS initiative to test company compliance around deferred compensation plans and increased focus on employment tax compliance
play read on

China: Unilateral termination of striking employees was illegal: Employers should consider the reason for strike action before dismissing
play read on

UK: KPMG's Guide to Directors' Remuneration 2014
play read on

Why This Expat Loves Living In Singapore
play read on

Cost of Living Allowances: Strategies for Relocation Success in a Changing Environment
play read on


Our Free eJournals
GlobalAutoExperts

To visit GlobalAutoExperts Directory, click here.


©2008 GlobalAutoIndustry.com | HCI Group, Ltd.
101 West Big Beaver Road, Suite 1400 | Troy, MI 48084 USA
USA Tel: +1.248.687.1060 | USA Fax: +1.248.927.0347
Fax UK: +44.(0)845.127.4765 | Fax Europe: +31.20.524.1659 | Fax Asia: +852.3015.8120